Harsh reality check! Microsoft’s Satya Nadella just put Jensen Huang-led Nvidia on notice; here's what he said
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A potential risk for Nvidia
Nadella, whose company is investing heavily in AI, pointed out a potential issue that could have serious consequences for Nvidia, reported The Motley Fool. Despite Microsoft's ongoing push to build its own AI infrastructure, Nadella revealed that by 2027 and 2028, Microsoft plans to lease much of its computing power instead of building more itself, as per The Motley Fool. He reasons that an oversupply of AI resources could drive prices down fast.
Satya Nadella predicts falling prices as oversupply looms
Nadella said “Because I look at the builds, and I'm saying, 'This is fantastic.' The only thing that's going to happen with all the compute build is the prices are going to come down,” as quoted by The Motley Fool. As per the report, an oversupply of AI computing could hurt everyone involved, especially those like Nvidia, who supply the hardware.
Nvidia has built a powerhouse business around supplying the chips that power AI development. But if everyone’s building out more capacity than they need, and demand doesn’t rise as expected, prices for Nvidia’s prized GPUs could plummet, reported The Motley Fool. The AI market might slow down as companies stop expanding and focus only on maintaining what they’ve already built, as per the report.
Nadella compared this to the railroad boom of the late 1800s, reported The Motley
